need to register for vat??

need to register for vat??

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ok croner are being a bit sketchy on this one

if business has for one month only spiked over 85k rolling 12 mopnthn test on 31/3/2024  are they obliged to register for vat ? - all other months including later ones are back below the 85k

direct gov has the following text in the release notifying the increase in vat - the text below kinda suggests to me that from 1st april onwards - the needs to register is removed. I could prbabaly read the text either way i must admit - does anyone know if the text below means that the registration that would not have been neded on 31/3/2024 is not now needed ? ie does this rule trump the one that says the client should have registered at 31/03/2024?

 i am aware this is probaly a very simple  exception application with directly proceeding and following tests clearly being below - but even the simple exception stuff can be  chow due to the vat office taking forever to rubber stamp simple cases - and it is at their discretion should i try not to preume what is arubber stamping excercise will alwasy be that way - even though i have never had a reasonably simple case rejected ever 

text from direct gov 

" It will also remove the obligation to register for those who are currently unregistered and are operating with a turnover between £85,000 and £90,000."

 

 

https://www.gov.uk/government/publications/vat-increasing-the-registrati....

 

Replies (12)

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By ireallyshouldknowthisbut
07th Jun 2024 10:15

I would assume this is just an interim approach due to the change in rates (?)

My approach these days on a temp breach would be practical - keep your head down and say nothing. If HMRC query it you can just say it was temporary and didnt want to bother them as you know how behind and under resourced they are. Im not sure what they can really do on a practical level if you should have registered and had it withdrawn and didnt bother. I cant think they are very interested.

As even I would advise the client of what we *should* be doing. And why they have the option of paying me to do that, or to do nothing.

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Replying to ireallyshouldknowthisbut:
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By rmillaree
07th Jun 2024 10:38

Im not sure what they can really do on a practical level

at a practical level if they do turn up even then you can try the exception route at that stage too so i wont diagree with the stance you take. Its just nice to know if its not an issue at the technical detail level.

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By cbp99
07th Jun 2024 10:16

The obligation to register arose *prior* to 1/4/24.

The quoted text would read better with the inclusion of " It will also remove the obligation to register for those who are currently unregistered *(and not currently required to be registered)* and are operating with a turnover between £85,000 and £90,000."

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VAT
By Jason Croke
07th Jun 2024 10:22

I was dealing with an exception from registration yesterday, we received a letter responding to our original exception request made in December 2022!

Our request was rejected, of course, but upon calling the exceptions team, it is apparent the team consists of partially trained monkeys because I was told to resubmit an online registration because the original one I submitted in 2022 has been "locked" and they cannot unlock it (you'd think a supervisor or senior person could override), but nope, register for VAT and ask for exception again.

Client built 1 new dwelling, sold it (zero rated), didn't want to reclaim any input tax, perfect for exception. Client no longer exists (Ltd was closed after the property was sold in 2022), so not sure how I can register a non existent business for VAT but apparently the only solution is for me to register it for VAT, I look forward to seeing how HMRC internal checks will cope with this.

Anyway, back to the question.

I think the line in the guidance is poorly written, not a surprise, I can see how it can be read both ways, but the law hasn't actually changed (only the threshold has)....when a business exceeds the VAT registration threshold at the end of any month, rolling 12 month window, if the turnover exceeds the threshold (£85k as at 31.03.24) then the business is obliged to notify HMRC and register for VAT (or ask for exception).

The reason we have to "register for VAT" is by registering and asking for exception, differentiates you from other businesses who don't do the turnover test and go over the threshold without knowing, as opposed to those who did the right thing at the right time.

Based on my experience of exceptions (I had another one that took about 5 months to get an answer), there is simply too much uncertainty for the client, wait 2-3 months, get the wrong answer and client has to find the VAT they didn't charge on sales whilst waiting for a response to their exception request.

Probably easier to just register for VAT for one month, then deregister as client back below the de-reg threshold a month (or two) later, not ideal but at least brings certainty, which is what clients want from their advisors....or as ireallyhsouldknow has stated, advise client of their obligations, advise that exceptions can be risky with no guarantee and let them decide if they want to put their heads down.....remember that HMRC may pick up when client files their accounts and shows turnover of £86k.

Risk wise, if HMRC spot this then they'll backdate the registration to 31/03/24 and your client would then have to stay VAT registered until they go below the dereg threshold so client is on the hook for potentially 1-3 months of output tax...if HMRC spot it of course.

As professionals we have to advise correctly, keeping your head down sounds the best solution but then are you not obliged to do a ML report because you know the client potentially owes VAT but has chosen to ignore the rules?

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Replying to Jason Croke:
David Winch
By David Winch
07th Jun 2024 10:45

Jason Croke wrote:

As professionals we have to advise correctly, keeping your head down sounds the best solution but then are you not obliged to do a ML report because you know the client potentially owes VAT but has chosen to ignore the rules?


From an AML perspective the issue is 'Has the client been dishonest?'.
To answer that question you have to ask yourself a two-stage question -
(1) What are the 'facts' as the client genuinely believes them to be (i.e. not necessarily the true facts as the accountant believes them to be)?
(2) On the basis of those 'facts' is the client's behaviour dishonest as that term would be understood by ordinary decent people?
David
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Replying to davidwinch:
By ireallyshouldknowthisbut
07th Jun 2024 10:49

@David, my view would be if there is no tax in play, its only paperwork, and there is no dishonesty.

Other views may vary.

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Replying to ireallyshouldknowthisbut:
David Winch
By David Winch
07th Jun 2024 10:54

ireallyshouldknowthisbut wrote:

@David, my view would be if there is no tax in play, its only paperwork, and there is no dishonesty.

Other views may vary.


If there is no tax in play, there are no proceeds of crime, so there is no money laundering, so there is nothing to report.
David
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Replying to davidwinch:
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By rmillaree
07th Jun 2024 10:55

what is clear here is that on any test the client would be below the re-registration threshold at the point at which vat was due to start being charged (due to lag) - so if we say they (the vat office) have the option to use the "ignore periods when below threshold" bit anyway - should we not expect that they would go away anyway as they know there is no reason not to grant exception request. no certainty here i would agree but if one can take the viewpoint there is no vat loss anyway the damage done really is simply not having done form one should have (presuming they dont get heavy handed)

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Replying to davidwinch:
VAT
By Jason Croke
07th Jun 2024 11:16

Thanks for the post and clarification, always useful to be reminded of the rules.

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Replying to Jason Croke:
By ireallyshouldknowthisbut
07th Jun 2024 10:51

@Jason, I have had similar experiences. Endless mucking about when there is no tax if you enter into the arena. If you sit outside in the sunshine you wont be missed!

The trigger point on the turnover on the SA return would in practice be the only time HMRC might pick up on it.

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Replying to Jason Croke:
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By FactChecker
07th Jun 2024 13:32

"I think the line in the guidance is poorly written, not a surprise, .."

or as Brad Pitt might have put it if he'd appeared in a film called Accounting Club, "The first rule of Accounting Club is never rely on GOV.UK".

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Replying to Jason Croke:
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By lordofsums
12th Jun 2024 11:26

Slightly off topic, but glad to know I'm not alone in the vat exemption issues. Have been dealing with 2 since June 2021, one was finalised last week!

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